Hacker News Reader

>The huge mistake you're making is in assuming that money is infinitely divisible. Let's say you start with $1 and you bet 99 cents and lose. Now try betting 99% of 1 cent and see if you don't go bankrupt.

But then it's possible to go bankrupt even if you use the Kelly criterion.

View on HN

Kelly criterion never claimed to prevent bankruptcy. It only tells you how to bet to achieve the maximum theoretical return possible given a set of odds and payouts.

I say theoretical because unless you're in a casino, you don't know the actual odds and edge you are playing with (because they move) which makes your Kelly ideal bet size a guess rather than a fixed number.

Here's more information: https://en.wikipedia.org/wiki/Kelly_criterion

Reply on news.ycombinator.com